We walk through the entire Lending Club loan application process from start to finish including a how to video.

This is part of our semi-regular series where we take an in-depth look at the platform experience from the borrower side. A few months ago I took out a loan on Lending Club and I recorded the entire experience for Lend Academy readers. This was my second time applying for a loan on Lending Club, I first did this back in 2011 and you can read about that experience here.

Now, I didn’t actually need this loan from Lending Club, I just wanted to get a first hand look at their entire borrowing process. For investors I think it is important to have some understanding of the borrowing process, this is the core of what marketplace lending is all about and something few of us stop to consider. And for potential borrowers it is good to know how the process works before you apply for a loan.

When I was applying for this loan I created a screencast video of the process. This video walks you through the different screens and lets potential borrowers know what to expect. It runs just under six minutes and if you are looking to obtain a loan on Lending Club I highly recommend you watch the entire video.[Read more…]

We walk through the entire Prosper loan application process step by step including a how to video.

A few months ago I took out a loan on Prosper and I recorded the entire experience for Lend Academy readers. This was my second loan on Prosper, I first did this four years ago and I shared that experience as well. In comparing the process from 2011 to 2015 I can say that Prosper has made applying for a loan quicker and easier for potential borrowers.

I decided to borrow money from Prosper not because I needed a loan but because I wanted to get a first hand look at their borrowing process. This will be the first in a series of posts over the next few weeks where we share the borrower experience of various different platforms. For investors I think it is important to have some understanding of the borrowing process, this is the core of what marketplace lending is all about and something few of us stop to consider.

I have created a screencast video of the actual application process. This walks you through the different screens and lets potential borrowers know what to expect. It runs just over five minutes and if you are looking to obtain a loan on Prosper I highly recommend you watch the entire video.

Lending Club becomes one of the first marketplace lending platforms to offer joint loan applications for consumers.

A few weeks ago, Lending Club investors received an email notifying them that Lending Club would be introducing a new feature for borrowers on October 6th. We learned yesterday that the new feature allows borrowers to apply for a joint application Lending Club loan. As part of this feature, there are four new fields that are available in the downloaded notes csv files and the API which we have highlighted below. As for information for borrowers, Lending Club posted a knowledge base article on joint applications.

Lending Club Joint Application – Borrower Information

From the Lending Club Knowledge Base:

To qualify for a joint application loan, a number of factors of either or both applicants are considered, including but not limited to, information provided on the joint application, information provided by credit bureaus, credit score(s), income, debt-to-income (“DTI”) ratio, credit history length and recent credit history.

Last week consumer advocacy group Consumer Action released a special report about the borrowing side of p2p lending. Titled simply the Peer to Peer Lending Survey it provided detailed information for borrowers about the p2p lending process and what to expect when applying for a loan at one of the major p2p lenders. It included information about Lending Club, Prosper, as well as Peerform.

I started reading this survey thinking there might be a few errors but the authors did an excellent job. As I read through the report it was clear that they had spent quite some time researching this topic. They talk about the loan eligibility requirements, the loan listing process, the interest rates, origination fees and much more. There is a helpful table that gives a quick snapshot of each of the three p2p lenders. For interest rates the authors looked at the available rates on April 30, 2012.

Peerform should be delighted to be included in this survey. They are currently only available for borrowers in 13 states and this survey treats them as an equal to Lending Club and Prosper. I don’t include much information about Peerform on the blog here because they are still only available for accredited investors and they have a high minimum investment requirement. They also do not make their loan volume information public so I do not include them in my end of month volume numbers.

For any borrower considering taking out a p2p loan this special report (link to the PDF is here) can certainly save time and money. The entire report can be read in under half an hour or you can just focus on the comparison table which summarizes the most useful information.

When borrowers apply for a loan at Lending Club or Prosper there are probably two main things they want to know. Will they be approved for the loan and if so, what will the interest rate be.

It may seem like a bit of a mystery as to how interest rates are calculated but a lot of this information is readily available for borrowers.

Interest Rates at Lending Club

Lending Club is completely transparent when it comes to how they set rates. Everything a borrower would ever want to know is on Lending Club’s page titled Interest Rates and How We Set Them. So if you know your credit report intimately you should even be able to work out your interest rate in advance. [Read more…]

Most borrowers, when applying for a loan on Lending Club, don’t give much thought to their loan amount. They have a need and they just apply for a loan to obtain money to meet that need.

However, depending on a borrower’s FICO score there is an optimum loan amount to borrow. Go above that amount and you will be paying a higher interest rate. All this information is contained on Lending Club’s site on their How We Set Rates page.

Consider the table below. Keep in mind that Lending Club uses credit scores from Transunion so if you find out your score before applying for a loan you can know your optimum loan amount. Keep in mind you can only apply for loans in $25 increments. [Read more…]

The borrowing process, detailed in the video below, was again a smooth and simple experience. But I encountered one major challenge. Lending Club rejected me outright for a loan. When I called and questioned them on this they said that I had too much debt for someone with my income. As I explained in the previous post, I have very little income outside investment income and I do carry a mortgage. So, despite my 815 Transunion credit score I received an “Adverse Action Notice” email giving me the bad news.

A P2P Loan at a 6.03% Rate

Luckily I had a plan B. I really wanted to understand and review the borrowing process at both Prosper and Lending Club so I applied for a loan in my wife’s name. Wouldn’t you know it, she was approved for a loan with an A1 grade and a rate of 6.03%. What was curious is that she had less than half my income (and it is pretty much all investment income – my wife is a part time yoga teacher and a stay at home mom) but no debt whatsoever. The home mortgage is in my name and so, despite a low income, her debt-to-income ratio was just 2.96%. Obviously this number is very important to Lending Club.

[Update: Here is an updated article with a new video about the loan application process at Prosper.]

Last week, for the first time, I took out a loan on both p2p lending platforms. Today, I am going to be sharing my experience of applying for a loan on Prosper. The process was relative smooth and painless, taking about 10 minutes to complete.

For p2p investors I think it is important to have some understanding of the borrowing process. This is really the reason I undertook this exercise. I didn’t actually need a loan but I have been investing in p2p loans now for over two years and I have always felt that my education was somewhat incomplete without going through the other side of the process.

I have created a video of the actual application process. This walks you through the different screens and lets potential borrowers know what to expect. It runs just under 7 minutes and if you are looking to obtain a loan on Prosper I highly recommend you watch the entire video.

I have been getting a few emails lately from borrowers wanting suggestions that will help get their loan approved on Lending Club or Prosper. Unfortunately many of these potential borrowers do not meet the minimum requirements and most had no idea their recent actions were hurting their chances of securing a loan.

An informed borrower will have a far greater chance of getting their loan on to the platform. Here are the five most important points that every new borrower should know before applying for a loan at Lending Club or Prosper.

1. A High FICO Score is Important

On Lending Club the minimum credit score you need before your loan application will be considered is 660. But even if your score is higher than that you may still have some problems. For example, if your FICO score is between 660-719 you need a debt to income ratio (excluding mortgage) below 25% and for those borrowers with a score of 720 or higher that maximum is 30%. There are also other requirements that Lending Club imposes that you can read here.

On Prosper the lowest FICO score is 640 but for borrowers with lower credit scores (640-660) the interest rates start to get pretty high, up to 31.99%. Prosper assigns every borrower a rating and that rating is what determines the interest rate. You can see a table with a complete listing of Prosper’s interest rates here. [Read more…]

Borrowers are getting funded pretty easily these days at Lending Club. In fact over 98% of loans have funded at Lending Club this year according to Lendstats and in my conversations with management there they say the number is even higher than that. So one could argue that every day is a great day to borrow money at Lending Club. But some days are certainly better than others.

The average amount of time to fund a loan hasn’t reduced much in the last year. Including weekends (when no loans are issued) in April 2010 it took 8.0 days for a loan to be issued and in April 2011 it took 7.7 days. Not much difference there. But if look at loans issued towards the end of the month you will see something different. Loans issued in the last two or three days of the month issue much more quickly on average.

Loans Issued in 27 Hours

Let’s take last month as an example. Some loan applications entered into Lending Club’s system on April 28 (the second last working day of the month) issued the very next day. Take a look at this loan, a $4,000 three-year credit card refinancing loan at 15.99%. It was submitted on 4/28/11 at 9:03am. It was issued the very next day, 4/29/11 at 11:58am. Or this loan, a $5,000 three-year home improvement loan at 14.79%. It was submitted at 9:16am on 4/28/11 and issued at 12:28pm on 4/29/11. [Read more…]

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Lend Academy has been bringing you all the news and information about peer to peer lending since 2010. Founded by Peter Renton, Lend Academy not only has the most active news site, but also the largest online forum and the first and most popular podcast in the industry.

The Lend Academy team loves peer to peer lending and our staff have all invested their own personal money in one or more of the platforms. Lend Academy Media is part of Cardinal Rose Group which also owns LendIt, the leading industry conference, and has a majority interest in NSR Invest.